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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
Petition for Relief of )
)
SOCA TREND VIDEO, )
Petitioner, )
)
vs. ) CSR 4443-L
)
ADELPHIA CABLE COMMUNICATIONS, )
Respondent, )
)
For Leased Access Channels )
MEMORANDUM OPINION AND ORDER
Adopted: July 8, 1997 Released: July 10, 1997
By the Chief, Cable Services Bureau:
INTRODUCTION
1. Soca Trend Video (herein "Soca") filed a petition for relief with the Federal
Communications Commission alleging that Adelphia Cable Communications (herein "Adelphia") refused
to make commercial leased access channel capacity available on its cable system in Lorain, Ohio in
accordance with Sections 76.970 and 76.971 of the Commission's rules, and failed to set rates in
accordance with Section 76.970. Adelphia has filed a response asserting full compliance with its
obligations under those rules.
BACKGROUND
2. In 1984, Congress amended the Communications Act of 1934 by adding among other
things a commercial leased access requirement, pursuant to which cable operators with 36 or more
activated channels must set aside part of their channel capacity for use by video programmers that are not
affiliated with them. The Cable Television Consumer Protection and Competition Act of 1992 (the "1992
Cable Act") revisited the leased access requirement and directed the Commission to establish rules for
determining maximum reasonable rates for, and reasonable terms and conditions for the use of,
commercial leased access channels. Pursuant to that Congressional directive, the Commission established
regulations applicable to leased access channels in its proceedings in Implementation of Sections of the
Cable Television Consumer Protection and Competition Act of 1992; Rate Regulation, MM Docket 92-
266, (the Rate Order), 8 FCC Rcd 5631, 5956-5961 (1993). The Commission revisited these regulations
in Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992,
Leased Commercial Access, Second Report and Order and Second Order on Reconsideration of the First
Report and Order, CS Docket 96-90, 11 FCC Rcd 16933 (1996) ("Second Report").
THE PLEADINGS
3. The petition, in the form of a brief one page letter, alleges that Adelphia refused to make
commercial leased access channel capacity available in accordance with Sections 76.970 and 76.971 of
the Commission's rules and failed to set leased access rates in accordance with Section 76.970. In support
of these allegations, the petition refers to a letter from Adelphia's general manager to Soca, containing a
statement that a rate schedule was "enclosed" and that Adelphia was willing "to negotiate lower rates
consistent with FCC guidelines" and "to lease [Soca] programming time at a rate of $100 per hour."
4. Adelphia, operator of a cable system in Lorain, Ohio, claims full compliance with its
obligations under the cited rules. More particularly, Adelphia states that it commenced leasing to Soca
one hour of time on Wednesdays from 5 p.m. to 6 p.m. at $100 per hour, in early 1994. Adelphia states
further that in April of 1994 Soca requested a change to a 9 p.m. time slot and questioned whether the
$100 hourly rate complied with Commission rules. Adelphia states that during subsequent negotiations
Soca was informed that it had allocated a channel on its basic tier available for part time leases from 6
a.m. to 6 p.m. daily, that the maximum rate would be $100 per hour of leased time, and that it was willing
to negotiate a lower rate.
5. With this as backdrop, Adelphia asserts that it has made leased access capacity available
and that its part time rates do not violate the Commission's rules. Adelphia asserts that the decision to
make one channel available for part time leases between 6 a.m. and 6 p.m. and the refusal to provide the
9 p.m. time slot requested by Soca is not inconsistent with announced Commission policy. It argues that
the Commission, in its Rate Order, declined to establish guidelines regarding the time that channel
capacity must be made available and left that matter up to the cable operator and prospective lessees.
Further, it argues that the Commission has reaffirmed that position and declined to reverse a cable
operators's refusal to provide a specific time slot to a lessee. It states that accommodating Soca's one
hour of programming at 9 p.m. would require displacement of another program which Adelphia is
contractually obligated to carry from 6 p.m. to 6 a.m. weekdays and all days on weekends. It takes the
position that neither Section 612 of the Communications Act nor Section 76.970 of our rules mandates
disruption of existing programming to accommodate a request for a single hour of leased access time one
night a week, when adequate alternative time slots are readily available.
6. In defense of the $100 per hour rate, Adelphia states that it developed its maximum
monthly full time rate of $13,167 per month. It then prorated that amount to develop an hourly figure
of $36.58 by dividing the monthly rate by the 360 hours per month in the 6 a.m. to 6 p.m. time slot still
available for part time service. In order to "take into account the lost advertising revenue opportunity, the
cost of technical support, as well as the pro rata channel capacity charge," it settled on $100 as the hourly
part time rate. Adelphia, citing two previous Commission decisions as permitting a cable operator to
develop a part time rate schedule that recognizes the different values of different hours of the day,
provided for the record a part time rate schedule that includes rates which vary in amount with time of
day and total hours of use per month. Adelphia argues that when all of the circumstances are considered,
including its statement to Soca that it would be willing to discuss lower rates, it has not set unreasonable
part time rates or been unreasonable with Soca.
7. Soca asserts in reply that Adelphia incorrectly determined the pro rata hourly rate, which
should be developed by dividing the monthly rate by the number of hours in an average month (not by
the number of hours available part time capacity) to get $18.29 per hour. Soca says the cost of technician
time should be distributed over all active channels serviced by the technicians. Soca further argues that
Adelphia's part time rate schedule submitted for the record is not consistent with the Commission's goal
of providing diversity in programming, because those rates make it impossible for an independent producer
to present programming without incurring a loss. Soca compares Adelphia's ad rates with the part time
rate schedule and asserts that the leased access rates leave very little margin to cover programming and
other costs. Soca further states that Adelphia's proposed part time rates, when summed over a month's
time, total $78,600, and thus exceeds the $13,167 maximum monthly rate. It asserts that, if different rates
for different time slots are to be allowed, the proposed rates should be reduced proportionately so that the
monthly total of part time rates will not exceed the maximum monthly rate.
8. Finally, Soca points out that, although Adelphia is required to designate over four channels
for leased access, it has made only one half of a channel available for part time use. Soca states that its
programming targets an adult male audience that is best reached during the hours 6 p.m. to 12 a.m., and
that it is essential for the success of its programming that those hours be made available for lease.
DISCUSSION
9. Two principal issues are presented in this case. The first issue is whether Adelphia's offer
of part time leased access channel capacity between the hours of 6 a.m. and 6 p.m. daily is consistent with
the requirements of Section 76.970 of the Commission's rules. The second issue is whether the schedule
of part time leased access rates offered by Adelphia to Soca meets the requirements of Section 76.970.
These issues will be addressed in that order and in the context of the leased access regulations initially
adopted in the Rate Order that were in effect when the petition was filed, except where noted otherwise.
A. Availability of Leased Access Channel Capacity
10. In Comcast, which interpreted the requirement to provide part time leased access services,
we declined to require a cable operator to open an additional part time leased access channel when time
slots were not available, noting that the programmer there failed to establish the presence of time critical
aspects, such as live performances or sporting events scheduled for specific times, that would make the
requested time slot critical to the success of the programming.
11. In the Second Report, the Commission revisited the matter of the obligation of cable
operators to accommodate requests for part-time leased access, stating that the requirements for opening
of leased access channels adopted in Comcast would promote the statutory objectives of competition and
diversity by providing part-time programmers with reasonable opportunity to obtain carriage. In addition
to confirming that operators are not obligated to open an additional leased access channel as long as
comparable time slots remain available on an existing leased access channel, the Commission made it clear
that part-time leased access requests also may be accommodated on comparable time slots on non-leased
access channels. The Commission further stated that operators need not open an additional part-time
channel until all other part-time leased access channels have at least 18 hours of leased access
programming every day. Finally in this connection, the Commission made it clear that an additional part
time channel need not be opened even if comparable time slots are no longer available on a part-time
channel that is only partially programmed for less than 18 hours.
12. In this instance Soca requested an evening time slot. We find the time slots offered by
Adelphia, between 6 a.m. and 6 p.m., not comparable to the time slot requested by Soca. The 6 a.m. to
6 p.m. time slots are considered in the industry as morning and afternoon daytime programming slots,
while the 9 p.m. time slot requested by Soca is considered a nighttime programming slot. Moreover, we
cannot not accept Adelphia's contention that its leased access channel is occupied between the hours of
6 p.m. to 6 a.m. and is therefore not available to Soca. The record contains no evidence that the
programming Adelphia contends it is contractually mandated to carry during these times is carried as a
leased access channel under the provisions of the Commission's leased access rules. Cable operators
may occupy leased access channels with other programming, but only until their use is required for leased
access programming. Consequently, we will order Adelphia to provide Soca leased access time in the
requested 9 p.m. time slot, or in another comparable nighttime slot.
B. Setting Part Time Rates Consistent with Section 76.790
13. The second issue concerns whether Adelphia's $100 per hour part time rate was developed
consistent with the requirements of Section 76.970 of the rules then in effect.
The information provided for the record shows that Adelphia properly calculated its maximum monthly
rate ($13,167) using the highest implicit fee formula in the manner required by Section 76.970 at the
time that rate was developed. However, we cannot find that Adelphia's schedule of part time rates meets
our leased access requirements. In the Rate Order, the Commission rejected both market place and cost-
of-service rate making methodologies in favor of the net implicit fee methodology embodied in Section
76.970 of the rules. In Comcast, we recognized that the statutory provisions relating to leased access do
not specifically address the question of rates for part-time use. We acknowledged that our rules mentioned
prorating the maximum monthly rate as a method available for establishing maximum rates for periods
of less than a month. We observed that the only rate that cable operators are not permitted to exceed
under our rules is the maximum reasonable rate as calculated on a monthly basis from the highest implicit
net fee. We declined to construe our rules as requiring an operator to adhere to a rigid formula for
determining hourly leased access rate only by prorating the monthly full-time rate into equal hourly
amounts. A rational time of day rate structure that is appropriately related to time of day pricing in the
media industry within the overall "highest net implicit fee" formula and that does not frustrate leased
access channel use would not conflict with the rules. Subsequently, we further mandated that a schedule
of part time rates
shall include rates for different times of day pursuant to which, if all times were
used, the sum of the part time charges for any single leased access channel would
not exceed its maximum monthly rate for a leased access channel calculated in
accordance with Section 76.970 or our rules.
14. To determine whether the sum of Adelphia's part time charges exceed its maximum
monthly rate, we must examine one criteria discussed in Prime Cable, the hourly rates applicable for
service of more than 50 hours per month. Applying those rates to the approximately 720 hours per month
produces a total of $55,350 as the sum of part time charges for one month, which greatly exceeds the
$13,167 maximum monthly full time rate, even if the $27 hourly charge for "technical support" is not
included in the full time rate. Moreover, a clause in the rate schedule providing for a proportional rate
reduction when usage produces revenues in excess of the maximum monthly rate only adds uncertainty
to unreasonableness. Under this usage based rate reduction scheme, the leased access programmer cannot
determine in advance what a leased channel will cost. The programmer cannot establish channel costs by
simply reading the rate schedule; indeed, channel costs cannot be determined until after service has been
provided. For these reasons, we find Adelphia's schedule of part time rates fails to comply with the
requirements of our leased access regulations as explained in Prime Cable. In the Second Report, the
Commission mandated that a schedule of part-time rates be developed either by prorating the full time rate
or by applying different rates for different times of the day, provided that the total of the rates for a 24-
hour period not exceed the maximum daily leased access rate. Adelphia's part-time rate schedule, which
consists of different rates for different times of day, also fails to comply with these requirements, since
the total of the highest rates for a 24 hour period ($1,845) exceeds the maximum daily rate ($439).
15. Furthermore, although Section 76.971(c) permits an operator to recover from the
programmer the reasonable cost of the technical support actually provided, the Commission made it clear
in the Rate Order that cost of services other than the provision of channel capacity must be excluded from
the calculation of the implicit fee used in determining the maximum reasonable rate. The Commission
revisited the area of technical costs in its Second Report. There the Commission clarified that the leased
access rates determined under Section 76.970 include the cost of technical support ordinarily provided to
other programmers. For that reason a cable operator may not impose an additional charge for technical
support ordinarily provided to other programmers. Therefore, cable operators may not attempt to recover
costs of technical support by burying them in a schedule of part time rates. In other words, the Section
76.970 methodology makes no provision for folding technical cost elements into the implicit fee
determination, as Adelphia suggests.
16. For the reasons stated above, we find that Adelphia's schedule of part time rates is not
consistent with the requirements of Section 76.970 of the Commission's rules as initially adopted or
modified in the Recon Order. Accordingly, we will require Adelphia to establish a new schedule of rates,
or rate card, for different times of day pursuant to which the sum of the part time charges for any 24 hour
period for a single leased access channel will not exceed its maximum daily rate for a leased access
channel calculated in accordance with the requirements of Section 76.970 of our rules as modified in the
Second Report. We will require Adelphia to provide Soca with a copy of such new schedule of part time
rates, in order that Soca may be able to select the rates and day parts most suitable to its future
programming needs. We will also require Adelphia to recalculate the hourly rates it charged Soca under
the former highest implicit fee formula in effect when the Soca's complaint was filed and payments were
made. Should this recalculation result in lower hourly rates under the former rules then Adelphia shall
refund the difference in charges.
17. We will also require Adelphia to maintain on file adequate records, consistent with Section
76.970(h)(5) of our current rules, that show the total daily revenues derived from part time users of each
leased access channel, together with the maximum monthly charge for a full leased access channel and
the data and calculations used for deriving the maximum monthly charge in accordance with Section
76.970 of the current rules.
ORDERING CLAUSES
18. For the foregoing reasons, IT IS ORDERED that the petition of Soca Trend Video (herein
"Soca") IS GRANTED in part as described paragraphs 9 through 17 above and in all other respects IS
DENIED.
19. IT IS FURTHER ORDERED that the Adelphia shall, within fifteen (15) days of the
release date of this order, (a) establish a reasonable schedule of part time rates, or rate card, for different
times of day pursuant to which the total of the rates for a 24-hour period shall not exceed the maximum
daily leased access rate for a leased access channel calculated in accordance with Section 76.970 of our
current rules, (b) provide a copy of such schedule of rates to Soca and (c) refund to Soca all amounts
collected in excess of part time rates applicable at the time the complaint was filed.
20. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's
rules, 47 C.F.R. 0.321.
FEDERAL COMMUNICATIONS COMMISSION
Meredith J. Jones
Chief, Cable Services Bureau